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Cyworld battles to recover from Facebook, Twitter challenge

Jan 22,2011
Lee Dong-hyung, the founder of Korea’s most popular social network service Cyworld and the current CEO of “Now Profile,” another SNS, said that Cyworld should not copy Facebook and Twitter even if it is starting to lose ground to its two U.S.-based rivals.

Cyworld is still the largest SNS in Korea with over 25 million members, which is more than the local followers of Facebook or Twitter.

It was also a pioneer of SNS in several other overseas markets and gained early recognition for its efforts. However, page views are much higher for Facebook and Twitter in Korea than for Cyworld.

Cyworld, which was founded in 1999, was acquired by SK Communications in 2003 and was able to make inroads in foreign markets even before Facebook was born.

However, most of its overseas operations have been abandoned, including those in the United States, Germany, Taiwan and Japan. Its operations in China and Vietnam are the only ones still in existence.

“The biggest mistake made was that Cyworld tried to create a separate network and environment for each country,” said Lee. While Facebook and Twitter have provided uniform service in all countries to create international networks, Cyworld’s strategy meant that barriers existed between users from different countries.

Another obstacle for Cyworld was that it still had the image of being a Korean company instead of an international one.

“SNS is not an industrial product like an automobile or furniture, but was basically a network,” said Lee. “The fact that the service was provided from Korea was a huge disadvantage in Japan. When problems such as Dokdo occurred between the two countries, Japanese members quit the service immediately.”

Lee added that Cyworld adopted the wrong approach when it came to the mobile Internet as it neglected Android-based smartphones and Apple’s iPhone. Instead, it focused on Windows Mobile-based smartphones such as the Omnia phone.

SK Communications recently announced that it will revive efforts to expand the global presence of Cyworld.

The company will create a global platform where all of its Internet users around the world can enjoy the service with uniform standards. But doubts remain over whether Cyworld can recover its previous dominance.

“Cyworld has been one of the pioneers in SNS and they have the know-how for a successful service,” said Lee Chang-young, an analyst from Tong Yang Securities. “One of the reasons why Cyworld failed in overseas regions was because the interest for SNS was very low at the time. But SNS has become popular with Facebook.”

“The obstacle for Cyworld is that Facebook has become such a dominant force in the global SNS market and people usually do not switch SNS once a personal network is formed.”


By Park Hye-min, Jung Seung-hyun [seungjung@joongang.co.kr]



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